This seven-quarter slide coincides with a key strategic decision taken by Eternal’s board in April 2025, when it approved capping foreign ownership at 49.5% to maintain the company’s status as an Indian-Owned and Controlled Company under FEMA regulations. The move was aimed at ensuring regulatory flexibility for Eternal’s fast-growing quick commerce business, Blinkit.
Under domestic FDI rules, e-commerce platforms with majority foreign ownership, defined as more than 50%, are not permitted to hold inventory and can only operate through the marketplace model. Retaining IOCC status allows Eternal to shift Blinkit to an inventory-led business model, under which the company can stock its own inventory rather than merely facilitating transactions between sellers and consumers.
Operating an inventory-led model gives the company tighter control over product assortment, supply chains and pricing, while also enabling better margin management. Over time, this could translate into improved profitability, especially in a segment where speed, availability and unit economics play a critical role.
However, the decision to cap foreign ownership mechanically reduces the room available for foreign investors, which partly explains the steady decline in FII holding over successive quarters.
Recent correction a buying window?
While FII holding has been falling, recent brokerage commentary suggests that sentiment on Eternal’s stock may be stabilising after a sharp correction. Shares of Eternal, which operates Zomato and Blinkit, have declined around 25% from its record high of Rs 368 it clinched in October 2025, driven by concerns over a near-term slowdown in quick commerce growth and the implications this could have for the company’s medium-term outlook. Some investors have also flagged intensifying competition and the potential impact on Blinkit’s margins.
But global brokerage Goldman Sachs said it disagrees with the extent of bearishness currently priced into the stock. The brokerage reiterated its Buy rating and set a revised 12-month target price of Rs 375, down from Rs 390 earlier, implying a 27.5% upside from previous closing levels.
Goldman said Blinkit’s implied EV to EBITDA multiple on normalised margins for FY30E stands at 14x, which it views as being at the lower end of the India internet peer group despite Blinkit’s stronger growth profile. The brokerage expects Zomato’s EBITDA to grow at more than 50% year-on-year at least until FY30E.
It also noted that its net order value growth estimates across Zomato’s segments are lower than management guidance. In a bull case scenario, where management guidance is met, Goldman sees an implied upside of 73%, compared with a downside of 22% in a bear case. Following Goldman’s endorsement, Eternal shares were up 1.5% at Rs 287.80 on the BSE.
Goldman estimates that Blinkit currently holds around 40 to 45% market share of India’s quick commerce industry by net order value, and expects this share to broadly remain at similar levels by FY30E.
Bernstein has also struck a constructive note on Eternal’s quick commerce business. Bernstein expects Blinkit to continue outperforming rivals Swiggy Instamart and Zepto in 2026, even as heightened competition keeps profitability volatile and stock returns uneven. The brokerage has named Eternal as its preferred pick in the sector, citing Blinkit’s stronger operating metrics, lower cash burn and more established contribution margins.
Bernstein has set a target price of Rs 370 and believes Blinkit can retain its leadership position and that much of the competitive pressure is already reflected in the stock price, making the current valuation a more favourable risk-reward proposition.
Quick commerce growth is expected to remain strong, with the industry projected to expand by around 80% in 2026, driven by continued dark store additions, deeper discounting and wider category offerings. While customer use-cases remain largely similar across platforms, the three market leaders have developed increasingly differentiated strategies over 2025. Bernstein believes that strategic positioning, capital allocation — including the ability to absorb near-term losses — and execution will be key in determining winners. It also expects the wide divergence in market estimates to narrow through 2026, with Blinkit likely to continue outgrowing Instamart and Zepto.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)